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Fukushima incident keeps the Global Nuclear Energy Industry subdued

Introduction: Political constraints have contributed to nuclear energy declining in 2012 in both output and volumes.

Industry Figures: The global industry contracted by -7.4% in 2012, to reach a value of $137bn, indicating a compound annual rate of change (CARC) of 3.9% in the period 2008-2012.

Asia-Pacific and Americas were primarily responsible for the decline.  Japan’s continued reactor shutdowns contributing to the catastrophic decline. Elsewhere, in the US, the largest nuclear energy market, companies are feeling cautious about any further investment in the current macroeconomic environment. In Europe, Germany has ordered the gradual shutdown of all its reactors, with only India, China and Russia signaling tangible expansions in their programs.

Industry trends/issues: The nuclear incident at Fukushima has hardened many countries’ opinions against nuclear energy. Many electorates of nations remain against any further nuclear energy expansions, which exacerbates the issues for this heavily regulated industry. The consequences of public outcry will result either in more strict regulations for the industry, or even its cessation, with many countries refusing to ratify further extensions or expansions.

The costs of expanding have also deterred expansion; in the UK a joint venture between RWE and EON in Horizons was abandoned after they believed the costs to be high, saved by Hitachi’s intervention. In the US, shale gas has become a more appealing prospect, causing a former CEO of Exelon (the US’ largest nuclear power company) to question the validity of expanding any nuclear programs now.

However, energy security bears an additional constraint. Fossil fuels march relentlessly towards depletion, and harbor hegemonic contentions. It was the OPEC crisis in the 1970s which prompted France to commit to nuclear power. Renewable sources remain the environmental optimal, with many large power companies aiming towards a much higher mix. However, the technology remains inefficient for now, so nuclear may still present a viable alternative. The prospect of a looming energy crisis has forced the new Japanese government to begin restarting their reactors following rigorous safety checks in the face of considerable public opposition.

Find this interesting? For more, read our ‘Industry Analysis Reports on Nuclear Energy’.

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